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Memphis Tennessee Bankruptcy Blog

Credit counseling required before filing for bankruptcy

As a Tennessee resident looking to give yourself a clean financial slate through filing for bankruptcy, you may be studying up on the process, and some of the information about what bankruptcy can do and what it entails may surprise you. You may, for example, not have realized that you will need to undergo credit counseling before you can move forward with your bankruptcy filing, and you may have questions about how to do so. At McElroy & Associates, we recognize that all bankruptcy filers must complete credit counseling before they can discharge any debts, and we have helped many people facing similar circumstances get their ducks in a row ahead of filing.

According to the Federal Trade Commission, while obtaining credit counseling is necessary for anyone looking to file for bankruptcy, so, too, is doing so through an organization approved by the U.S. Department of Justice’s U.S. Trustee Program. So, once you select a program through which to undergo credit counseling, what can you expect next?

Moving on after bankruptcy will not be as hard as you think

Once your bankruptcy is behind you, life begins to look brighter. After all, you have succeeded in getting rid of an enormous mountain of debt.

Yet you cannot help wondering what is next. Will you ever get credit again? What if you fall back into the old pattern of debt? By taking five simple steps, you can move forward with confidence.

Why are old bankruptcy documents important?

When your bankruptcy is done, you are eager to move on. Many people never want to even look at their old bankruptcy paperwork. Even so, you should still preserve your bankruptcy documents and keep them in a safe location. There may be some occasions when you need to access your old bankruptcy paperwork. In fact, your documents may even help you with your financial future in Tennessee.

As US News and World Report explains, at some point following your bankruptcy, you may want to approach a lender for a mortgage on a home or a loan to finance a new business. However, the subject of your bankruptcy is bound to come up, at which time your lender may ask to see any number of your bankruptcy documents. These can include your bankruptcy petition or the court documents of your bankruptcy filing.

Are you eligible for bankruptcy?

You might not think about bankruptcy as something you have to qualify for, but that is how it works in most cases. At Jimmy E. McElroy & Associates, we find that most people in Tennessee simply are not prepared for how exclusive the process is, especially when it comes to Chapter 7.

However, it is possible to get debt relief in most situations. Even if it were not your first choice, some form of bankruptcy would probably be available to you if you were in dire financial straits. If you did not qualify for a Chapter 7 request, for example, the judge might ask you to convert your filing to Chapter 13. 

Tips for rebuilding credit after bankruptcy

In the wake of a Tennessee bankruptcy filing, chances are, you are working hard to get your finances straightened out so that you can get the fresh start you desire. While filing for bankruptcy is often the first step in the process of rebuilding your financial situation, there are also steps you will need to take after your bankruptcy filing if you wish to get your affairs back in order. At McElroy & Associates, we recognize the critical nature of rebuilding your credit after bankruptcy, and we have helped many clients facing similar circumstances accomplish this and related objectives after a bankruptcy filing.

According to Nerdwallet, the bad news about filing for bankruptcy is that doing so may have a negative impact on your credit score. Your credit score may have already been suffering, however, if you were struggling to keep up with your bills, and there is some good news – you can start rebuilding your credit pretty quickly following a bankruptcy filing.

What should I know about chapter 7?

When you realize that your finances have spiraled out of control, you may consider filing for bankruptcy in Tennessee. There are many different types of bankruptcy and as you begin looking into your options, it is important to understand the basic information so you know which kind will be best for your specific situation. You may want to start your search by learning about chapter 7.

One of the important things you need to know is whether you are eligible for chapter 7. According to the United States Courts, you can file for chapter 7 bankruptcy if you are a private individual or if you have a business partnership. You typically need to go to credit counseling before you file for bankruptcy and you also usually need to attend any court sessions connected with your debt. Chapter 7 is different from other kinds of bankruptcy because it typically does not include a repayment plan. Your assets are usually sold to pay off your debt.

Business loans and personal bankruptcy

Many aspiring or current entrepreneurs in Tennessee worry about the effects that bankruptcy may have on their ability to secure financing for their projects. However, there is more myth than fact to many of the ideas surrounding the relationship between debt restructuring and business loans.

Chapters 7 and 13 of the bankruptcy code are personal types of bankruptcy. They may not affect certain business matters at all. Other repercussions, while they often exist, may not be as extreme as most people imagine. 

3 reasons not to trust debt relief companies

When your debts keep piling up and you see no way out, you may turn to any source that promises to relieve you of this burdening situation. Advertisements from debt relief companies may become more enticing, as they guarantee you an easy escape through consolidation or settlement for a nominal fee.

Can you trust these companies, or are they too good to be true? More often than not, you should avoid them for these three reasons.

How do Chapter 7 and Chapter 13 bankruptcies differ?

As a Tennessee resident who is grappling with increasingly overwhelming medical, credit card or other debt, you may be weighing your options and trying to determine whether filing for bankruptcy could potentially give you the fresh start you desire. You may, too, recognize the terms “Chapter 7” and “Chapter 13,” but you may not fully understand the distinctions between the two main types of consumer bankruptcies or know which type may be more appropriate for your circumstances.

According to the American Bar Association, the primary difference between Chapter 7 and Chapter 13 bankruptcies is that Chapter 7 bankruptcies are essentially straight-up liquidations, while Chapter 13 bankruptcies involve establishing some type of payback plan. More specifically, Chapter 7 bankruptcies are for lower-income earners who do not have enough money at their disposal to pay back any of their debts, while Chapter 13 bankruptcies are for those with higher income levels who can typically pay back at least part of what they owe creditors.

When you should not file for bankruptcy

You are probably not excited at the prospect of filing for bankruptcy. There are often some big changes you could face with this type of financial relief; it just happens to be one of the most advantageous strategies available for people suffering from massive debt. In fact, once you look at all of your options, you might decide that it is the best management option available either in or out of the Tennessee legal system.

No matter how effective bankruptcy might be for your debts, it is not always the best path. At Jimmy E. McElroy & Associates, we try to help people find the way out of their financial troubles, even if that means suggesting other methods. 

*We are a debt relief agency.
We help people file for bankruptcy relief under the Bankruptcy Code.